Should Your Company Invest More in Building its Pipeline?

This blog post originally appeared on AG Salesworks blog at http://www.agsalesworks.com/Blog-Sales-Prospecting-Perspectives/bid/97058/Should-Your-Company-Invest-More-in-Building-its-Sales-Pipeline#.UWVvFJN19NQ.

Over the first quarter of the year, and in particular the last month, we have heard this question a lot.

For many the question stems from doubt about the ability of Sales to produce replicable results, and for others it stems from a desire not leave anything on the table. In both instances the answer is the same:

Yes, you should always invest more in building your company’s pipeline!

Why? Because the pipeline is the soul of a business’s potential to grow and prosper. Without a strong pipeline, your company’s ability to succeed and meet customer and stakeholder expectations is greatly diminished. Today’s turbulent economic environment requires persistent and frequently incremental investment in one’s pipeline.  To maximize your return you must invest in both pipeline quality and quantity.

Investing in Pipeline Quality

Investing in pipeline quality (ideally) comes first. This may seem counter intuitive if your confidence in sales’ ability to deliver is low and you need numbers, but it’s counterproductive to pump a higher volume of opportunities into the pipeline without addressing flaws in sales and pipeline management processes. You might survive another quarter if you crank up pipeline volume, but ultimately the pipeline will slow to a crawl without addressing quality. So, tackle quality first, or at least simultaneously with quantity. Improving pipeline quality requires investment in three areas:

  1. Aligning the pipeline’s stages and gates with the sales process. The first step in improving the quality of the pipeline is ensuring that its stages align with the sales process; this symmetry ensures that there is “one set of books” for revenue and eliminates misunderstandings between Sales and senior management, particularly Finance. The addition of gating factors for each stage increases managers’ and reps’ ability to pinpoint exactly where opportunities are in each stage and determine what actions must be taken to make progress, increasing their credibility both internally and externally as they manage the sales cycle.
  2. Calculating sales cycle times and conversion rates by gating factor and stage. Investing in measurement of sales cycle time, intra and inter-stage, enables managers and reps to spot and remediate trouble spots quickly. Measuring cycle time also increases reps’ sensitivity to, and understanding of how they are able to move different kinds of opportunities, building their agility and perceptiveness, and ultimately increasing their pipeline velocity and close rates, and forecast accuracy.
  3. Implementing a sales management review process focused on results, not activities or volume. Quality is maximized when the above investments are combined with a sales management review process. The best review processes, while led by managers, are two-way problem-solving conversations with sales reps. The focus of these conversations is not on activity or volume, but on the following questions: How fast is each opportunity progressing?, What gating factors have been accomplished and which need to be accomplished? How each gating factor can best be accomplished?, and If stuck, what actions are appropriate, and why, in the context of the account, to regain momentum?

Investing in Pipeline Quantity

Once pipeline quality has been improved, you are ready to invest in quantity. Driving an increase in the quantity of opportunities in the pipeline requires investments in:

  1. Identifying your target customer(s) and their specific needs, criteria, and behaviors. This may seem trivial, particularly if your company or territories are well established, but it’s not. The goal is to develop veins of prospects with homogenous characteristics that will reference each other, creating greater pipeline volume. To do this, review the accounts that you have won in the last year. Identify commonalities in their: needs/problems, buying criteria, demographic profile, and buying behavior.  To develop even deeper insights, segment accounts before beginning this exercise into their groups, accounts that are brand new wins, accounts you are simply retaining, and accounts you are penetrating . Conducting this exercise twice a year will help Sales identify growth themes that enable reps to build their pipeline volume, and enable Marketing to sharpen its messages to clusters of prospects.
  2. Developing a tightly scripted automated marketing process and tele-prospecting process that scores prospects based on their behavior and characteristics. One of the most underleveraged tools to drive pipeline quantity is an automated marketing and tele-prospecting process. Most Sales organizations lack activity above the funnel, and therefore an adequate flow of quality opportunities. If you have not invested in an automated marketing and tele-prospecting process, it’s time to take the plunge. Fixing this problem has never been easier and more cost effective; an automated marketing and tele-prospecting process is the cheapest insurance you can buy against poor quota attainment and inadequate testing of your relevance in different markets.
  3. Segmenting your sales force to create Opportunity Development Specialists and Sales/Account Reps. You have heard a lot about how buying has changed; customers complete over 50% of the sales process before meeting your sales rep, customers expect your reps to provide more and deeper insights into your business, and more stakeholders than ever before are involved in the buying process, lengthening the sales cycle and increasing its complexity. Unfortunately, all of the above apply for most of Sales forces, yet many still lurch along expecting their Sales/Account Reps to prospect and cold call consistently and aggressively. It’s time to stop asking your company’s highest priced resource to do low-value, high volume work that is decidedly different than managing the later stages of a sales process. In most cases (except for selling in extremely mature markets, or in processes where the buyer expects a single point of contact) it’s far more efficient and effective to segment the Sales force into Opportunity Development Specialists and Sales/Account Rep roles and narrow Sales/Account Rep prospecting to a narrow set of highly qualified leads (e.g. a short list of 10-15) that have a tight fit with their current account base.

If you have not invested persistently in your pipeline, now is the time to catch up. With three quarters left in the year, there is plenty of time to make incremental investments that will help you exceed plan.

Remember, two investments are required. To achieve Sales efficiency and effectiveness you must invest in both quality and quantity on a regular basis.

-TGK


What Problem Do You Solve and Do You Solve it Differently?

Last week, a ran a seminar on Building Revenue Models for the community members at 1871, the Chicagoland Entrepreneurial Center’s (CEC) project that supports entrepreneurs on their path to building high-growth, sustainable businesses that serve as platforms for economic development and civic leadership in Chicago. My partner, Steve Baumgartner, and I have been struck by some 1871 entrepreneurs’ inability to clearly state what problem they solve and, more particularly, how they solve it differently. Instead of being able to clearly articulate the problem they solve, some of these entrepreneurs remain fixated on talking about the features and benefits of their solution and, on a few occasions, the needs that their solutions address.

In both circumstances, these entrepreneurs are off target and wasting the sales opportunities they are generating. Whether it’s true or not, few potential customers want to hear them talk about how elegant their product is, or how it provides features and benefits, that they likely do not even think they need. Instead of being sold a solution, or features and benefits, prospects want help solving a problem, and the bigger the problem the better.

If you find yourself in this situation, It’s time for them to take a step back and develop some hypotheses about what problems your products/solutions solve for customers. Dig deeper past the symptoms of customer’s performance problems into how their businesses operate and how your products/services impact their ability to operate more efficiently or effectively. Confirm what problems your products/solutions address better, faster, and cheaper. Then take a close look at the next best alternatives available for your target customers and compare and contrast them to your products/solutions. Push hard to define how your product/service and business model are truly different. It’s no longer sufficient to just be better, faster, or cheaper, customers want to buy solutions that are different and uniquely create value for them or their businesses. Through iterative conversations with customers you can hone and simplify your message and define what truly makes you different.

You will know you’ve got your fly wheel spinning when the sales cycle speeds up and prospects and customers start noting and referencing what makes your solution different with each other.

-TGK

If you are working on defining what problems you solve and how you solve problems differently, please comment here, or contact us, we would like to hear from you.


Growth Drivers for 2013

10 Proven Growth Drivers that Get Results!

At Evergreen, we help companies grow more, predictably. To enable greater and more predictable growth, our work with senior leaders, sales mangers, and sales reps focuses on:

  •  Making informed strategic choices about which growth opportunities to pursue,
  • Organizing resources effectively, and
  • Equipping sales managers and teams with the right processes and tools to sustain success

Over the last six weeks we have focused on 10 growth drivers we believe senior leaders, sales managers, and sales reps should focus on to drive growth in 2013. We have selected these 10 issues because they are actionable at all levels – the rep, team, and the organization. Moreover, they are proven, based on our experience with over 60 clients, to accelerate growth in a wide variety of industries.

Please follow us via email or RSS feed . And, if you have recently deployed, or plan to deploy, one of our 10 Drivers, please add a comment on the blog or Twitter at @EvergreenGrowth.

Our Top 10 Growth Drivers for 2013 Include:

  1. Growth Driver #1 – Confirm Your Revenue Model
  2. Growth Driver #2 – Increase Your Value
  3. Growth Driver #3 – Sell the Way Customers Buy
  4. Growth Driver #4 – Pursue a Mix of Revenue Gains and Drains
  5. Growth Driver #5 – Identify Growth Themes
  6. Growth Driver #6 – Create a Road Map to Success
  7. Growth Driver #7 – Tighten Your Focus on Sales Management
  8. Growth Driver #8 – Assess Your Turnover Risk
  9. Growth Driver #9 – Focus on Opportunity Creation
  10. Growth Driver #10 – Define Decisions at Customer Touchpoints Before Investing in BI Tools

-TGK


Growth Driver #8 – Assess Your Turnover Risk

Ask these 8 questions to assess your risk of unwanted turnover and identify ways to improve your front-line Sales Management.

One of the keys to sustained predictable growth that has been overlooked during the recovery is the need to retain top and high potential talent through high quality front-line sales management.

We are increasingly seeing top and high potential talent take flight from organizations as the economy improves. And, one of the underlying themes in many of these cases, is the lack of quality sales management. Instead of focusing on creating quality managers, organizations have over focused on sales rep training, sales productivity tools, and compensation.

Do you know if your company is at risk of losing its high potential or top talent? 

If you don’t know the turnover risk or your sales team and lack the means to assess it, you should start by asking these questions:

  1. Do you know what is expected of you at work in terms of activities, interim goals, and business outcomes?
  2. Do you have the materials and tools you need to do your work well?
  3. At work, do your opinions seem to count?
  4. At work, do you have the opportunity to do what you do best every day?
  5. In the last week, have you received recognition for and constructive feedback on your work?
  6. Does your immediate manager care about you as a person?
  7. Do the managers with whom you interact encourage your growth and development?
  8. Does the mission of the company make you feel like your work is important?
Note, the above questions are adapted from Buckingham and Coffman’s First Break All the Rules.

The beauty of these questions, in addition to their simplicity, is that answers to them not only help you gauge the level of turnover risk, but also help you rapidly identify changes that can be made on the front-line to mitigate turnover risk and build a strong sales management team.

If you have not asked these questions recently, it’s time to get busy!

-TGK


Growth Driver #7 – Tighten Your Focus on Sales Management

With over 486 million google hits, the prominence of Front-Line Sales Management as an issue is indisputable. Yet, few sales organizations have a tight enough focus on their Sales Managers, particularly when it comes to hiring, enabling managers with a process, and setting and managing performance expectations.

Our experience suggests CSOs should adopt three prescriptions to tighten their focus on Sales Management.

  1. Hire Slowly. All too often, CSOs rush hiring decisions opting to fill open sales management positions quickly – usually from the field – lest a sales team miss its numbers. This approach is flawed in many ways and has enormous negative consequences. Not only does it lead to sub-optimal revenue and profit performance by the team, but it also frequently leads to higher levels of turnover within the team and loss of alignment with the sales strategy. Why? Because Sales Management is a unique role, one that requires strategic thinking, managerial, coaching, process management, and motivational skills. Not to mention strong alignment and fit with senior management, particularly around strategic decision making and performance management. Instead of taking the easy path and promoting a salesman, CSOs should hire slowly and deliberately, making sure that candidates  possess the foundational and strategic competencies necessary to drive improved performance across their team. Seethe  Chally Group’s assessments at www.chally.com, they are a great resource that enables high quality hiring.
  2. Implement a Sales Management Process. Despite being heralded in so many articles as “the linchpin of strong sales performance”, too many sales managers remain mired in administrative roles facilitating their rep’s transactions, enabling cross-functional communication, or worse still walking the tightrope of managing their own book of business and their team’s transactions, as opposed to developing rep’s capability. What’s missing is an intentional process like the one pictured below.Sales Mgt. Process

    Equipping the Sales Management team with, and teaching them how to use, this type of process shifts managers conversations and interactions with their reps from transactional administrivia to teachable moments that enable personal development.

  3. Fire Fast. When’s the last time you our your senior team fired a Sales Manager? I recently took a poll of clients and only 20% could recall a time when a Sales Manager got let go. Perhaps this is a consequence of misplaced loyalty resulting from hiring too quickly, but that doesn’t make it right and only serves to compound your company’s problems. Managers should be managed with the same process as reps. Expectations should be clear, performance outcomes should be tracked and reported frequently, and feedback and assistance should be given regularly. And, when performance does not improve quickly, sub-par managers should be removed before their sales teams are negatively impacted.

If you have recently completed a project to increase your focus on Sales Management, please comment below. If you’re about to start, make sure you are equipped to hire slow, implement a sales management process, and fire fast before you embark on the journey, otherwise your other investments may yield sub-optimal returns.

-TGK


Growth Driver #6 – Create a Road Map to Success

Remember Emerson, the journey is the destination!

In a recent webinar with Domo, hosted by Bob Kelly of the Sales Management Association, we discussed Optimizing the Sales Machine and the major impediments to building a Sales Machine that yields predictable, scalable results. 

In our conversation, one of the points that resonated was Sales Manager’s need for a causal road map to success, one that breaks a desired outcome down into specific interconnected activities and goals which are correlated to, and ensure, success. To establish a road map to success, we recommend utilizing the following framework.

 

 

 

 

 

 

 

 

While simplistic, this framework is powerful because it  re-establishes fundamental connections between activities, that reps and managers can manage, influence, and measure on a day-to-day basis, and interim goals that are highly correlated with the attainment of business outcomes (aka Success).

Gone are the days of focusing solely on the destination, without thinking about the journey. Equipped with this road map, managers can now have much more specific conversations with their reps about why opportunities are progressing the way they are and how they are going to act to intervene. And, reps can focus deliberately on activities and course corrections, marking their progress by the attainment of interim goals, with growing confidence they will achieve success.

If you have recently created a Road Map or re-established links between activities, goals, and outcomes, please comment here or on Tweet us at @Evergreengrowth.

Visit our first five Growth Drivers here:

  1. Growth Driver #1 – Confirm Your Revenue Model
  2. Growth Driver #2 – Increase Your Value
  3. Growth Driver #3 – Sell the Way Customers Buy
  4. Growth Driver #4 – Pursue a Mix of Revenue Gains and Drains
  5. Growth Driver #5 – Identify Growth Themes

-TGK

-TGK


Growth Driver #5 – Identify Growth Themes

Granular analysis of growth  yields valuable insights into growth themes and informs Sales Model adjustments.

In today’s low growth and volatile economy, it is difficult to identify persistent growth themes and realign the Sales Model to achieve more persistent growth. What’s needed is a more granular pattern of analysis to identify where growth is occurring. To get granular, we recommend Win, Grow, and Own Analysis (WGO).  At its highest level, WGO analysis identifies the provenance of revenue growth  from three sources:  (1) recurring business with existing customers that you retain or “Own” year-over-year; (2) new business with existing customers that represent “Growth” within existing accounts; and (3) new business with new customers that represent incremental customer “Wins” for your company.

Then WGO drives deeper  to identify growth themes within each source. To do this, iterative analysis is performed  at finer levels of detail, within each source, such as by:

  • Customer segment
  • Sub-segments
  • Geography
  • Region
  • Sales channel or team type
  • Sales territory
  • Product/Service

Let’s take a look at the example  of how iterative analysis can enable the identification of growth themes and adjustment of one’s sales model.  In this example previous year’s sales were $10 million and  this year’s sales were $10.72 million.  How did this growth come about and, equally importantly, could it have been greater?

The first thing that stands out is the $2.35 million of customer “churn” experienced.  Some of this non-recurring business may be natural; i.e., there always has been and always will be a certain number of one-time buyers. But, in this case, churn is clearly the first area of investigation. If churn can be  minimized with effective customer retention strategies, then the company stands a much greater chance of efficiently achieving year-over-year sales growth.  “Owned”  revenue forms the foundation upon which revenue growth and  sales efficiency are built.  And, in this situation, the company has proven itself very capable of generating $2.45 million (24.5% growth) in revenue growth from further penetration of existing accounts. Lastly, while “Win” revenue represents a much lower component of overall revenue, closer inspection shows that 6.2% growth through new customers is a an extremely competitive rate of growth, compared to the competition. This makes the acquisition of new customers, that are not “one-timers” but are sticky and more likely to buy more, a top priority along with more effective account retention.

Let’s take a look at how the WGO analysis can be applied, with more granularity, to sales reps.  The table below further breaks-down the revenue analysis we initiated earlier by analyzing the revenue and profit contribution of individual sales reps. This level of analysis offers terrific insights on which reps are leading performers and which reps are lagging performers.  Sales leaders can build upon these insights, particularly with the addition of sub-segment and product level analysis, to identify best practices that can be used to refine strategy and tactics.  This knowledge also empowers sales leaders to define credible performance benchmarks that are supported by fact versus being simple “wet finger in the wind” aspirations.  The implications for coaching, training and personnel decisions are apparent.

For instance, Jowan Petrovic in the above example is clearly a standout at retaining revenue and penetrating existing accounts. However, new business generation is not his strong suite. With this insight, his manager should dig deeper and further profile his revenue. In this instance, further profiling revealed that the products Jowan sells into existing accounts are different that those he attempts to sell into new accounts, highlighting either a need for potential training or the segmentation of Jowan’s role, to exclude selling new accounts. In contrast to Jowan, there is Joe Bong, who is great at winning accounts, but terrible at owning accounts. In Joe’s case, there’s clearly a need to dig in and analyze the types of accounts he is acquiring, as well as his account management skills and approach.

If you have not granularly decomposed where and how growth is occurring in your company, it’s time to get busy and apply WGO analysis, it will help you quickly identify growth themes, provide a fact base for high value conversations between Sales Managers and Reps, and it will enable you to make adjustments to your sales model to achieve higher levels of efficiency and effectiveness.

We are half way through our 10 Growth Drivers for 2013. Catch up on the first four tips here:

  1. Growth Driver #1 – Confirm Your Revenue Model
  2. Growth Driver #2 – Increase Your Value
  3. Growth Driver #3 – Sell the Way Customers Buy
  4. Growth Driver #4 – Pursue a Mix of Revenue Gains and Drains

-TGK